Walgreens Continues Efforts to Divest Healthcare Clinic Chain VillageMD

Walgreens Boots Alliance-backed healthcare clinic chain VillageMD is reportedly working with advisers to explore a sale, restructuring or other options.

This move comes after Walgreens CEO Tim Wentworth said during a January earnings call that the company plans to divest VillageMD, Bloomberg reported Wednesday (Feb. 12).

A Walgreens spokesperson told Bloomberg that Walgreens “is continuing to work toward executing its stated goal of securing an endpoint for its investment in VillageMD, consistent with Walgreens’ turnaround strategy.”

The company bought a controlling stake in VillageMD for $5.2 billion in 2021 as it sought new sources of revenue beyond its pharmacy and front-of-store offerings, according to the report.

The Walgreens unit that includes the stake in the healthcare clinic chain booked an operating loss of $325 million during the quarter ended Nov. 30, the report said.

After VillageMD defaulted on a senior secured debt provided by the company, Walgreens said in August that it would not exercise any remedies against the firm and that it was in discussions with third parties to consider the future of its investment in VillageMD, per the report.

This report came at a time when Walgreens is in the midst of a turnaround process in which company officials are looking to stabilize the retail pharmacy, optimize the store footprint and address reimbursement models.

“We still have substantial work to do here,” Wentworth said Jan. 10 during the company’s quarterly earnings call. “While our turnaround will take time, our early progress reinforces our belief in a sustainable, retail pharmacy-led operating model.”

Walgreens began its turnaround strategy last year after considering closing a quarter of its stores in the early summer. In December, media reports circulated about Walgreens considering a deal to be sold to a private equity firm, but those reports were neither confirmed nor denied.

Retail pharmacies like Walgreens, CVS and Rite Aid face challenges to their traditional business models as consumer preferences move toward digital solutions and telehealth services, PYMNTS reported in October.

As foot traffic declines, retail pharmacies find themselves facing pressure from both traditional competitors and new entrants like Walmart and Amazon.